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The number of tourists plummets, Hong Kong's tourism retail industry is under pressure

Date: 2020-03-06

On March 3, Midland Commercial and Industrial Data Research Department released the latest survey of merchants in the core areas of Hong Kong. In January and February of this year, the four core shopping areas of Hong Kong, Tsim Sha Tsui, Mong Kok, Causeway Bay and Central, the number of vacant shops from September last year. Of the 482 companies, they rose sharply by 43% to 689 after six months, with a vacancy rate of 9.2%. This is the company's highest since the statistics in 2016.

Of the four core business districts in Hong Kong, Tsim Sha Tsui is the area with the largest increase in vacancy rates.

During the Spring Festival, there were few pedestrians on Canton Road in Tsim Sha Tsui, which were gathered in luxury stores. This was rare after the SARS epidemic in 2003. In the statistics of Midland Industrial and Commercial Shops in the past 5 years, Canton Road and Haiphong Road have not had any vacant street shops for three years. The relatively poor performance of the third quarter of 2017 also recorded only two vacant. But this Spring Festival, there are already 4 empty shops here.

Also located near Canton Road and in Hong Kong's largest shopping mall, Harbour City. In early February, there were also many shops closed and shops closed, including more than 24 facades surrounded by decorative panels. The vacancy rate of shops in Tsim Sha Tsui area rose sharply from 6.8% in the third quarter of 2019 to 10.9%, and the number of vacant shops was as high as 167.

Causeway Bay, which faces Tsim Sha Tsui across the sea, is also in a bad situation.

The high rents in Causeway Bay are world-famous. A report by real estate service provider Dade Liang Xing shows that the rent per square foot (about 0.09 square meters) of Russell Street in Causeway Bay is $ 2,800 (about RMB 16,800), which exceeds the price of Fifth Avenue in New York. It is the most expensive shopping street in the world.

Previous interface news reported that Louis Vuitton Causeway Bay Times Square Branch and Prada Causeway Bay Plaza 2000 Stores have all closed down due to the plunge of tourists affected by social events and they cannot afford high rents.

At the time when the new crown pneumonia epidemic struck, the 200 square foot (about 22 square meters) street shop in Causeway Bay could still sell for a high price of 100 million Hong Kong dollars.

Last year's storm has not been digested, and the New Crown epidemic has worsened. No tourists and high rents have driven many merchants away, resulting in a high vacancy rate in Causeway Bay. According to the statistics of Midland Commercial and Industrial Stores, 133 of the 1,094 street shops in the area were vacant. The vacancy rate rose from 9.4% in the third quarter of last year to 12.2%, which is also the highest among the four core business districts.

In other core business districts, in addition to fewer tourists affecting shops and accidents, the decline in the willingness of local citizens to go out has also caused difficulties for restaurants and retailers.

Central has always been Hong Kong's favorite food and bar paradise for the middle class, foreigners and tourists. Since June last year, business here has been declining. In the third quarter of 2019, there were 41 vacant shops in restaurants and bars in Lan Kwai Fong, Wellington Street and Soho. By January and February this year, the vacant shops in the Central Food Bar Street rose sharply to 64. The vacancy rate is as high as 18.8%.

Taken together, the catering and tourist-related industries were the worst affected. There was a net decrease of 62 restaurants in the first half of the year, and a decrease of 49 in the clothing category. The number of tourists-related jewelry, pharmacy, and cosmetics merchants also saw double-digit declines. In terms of local consumption, such as beauty and hairdressing stores rose against the market, increasing 19 in the first half of the year, mainly due to the decline in rents, which led to the sub-leasing shops sub-leasing sub-shops.

Lu Zhanhao, director of Midland IC & I, said that the Hong Kong market has now entered a very large adjustment period. With the tide of retail business closure and layoffs, the overall vacancy rate in the core area in the third quarter is expected to rise to 11.5% to 12.5%. The number of stores will rise to 900. In terms of rents, he expects the rental price of core areas to fall by about 40% throughout the year, and non-core areas will also fall by 10 to 15%. At present, many owners have reduced rents in stages, but this has only helped merchants to "salt the salt water" (described as a sloppy salary). Due to the sharp decline in business, they have lost confidence in the retail prospects and some are only willing to renew short-term rents. More serious.

Huang Hancheng, the chief executive officer of Midland Commercial and Industrial, believes that the current situation is worse than during the SARS period. After the epidemic, it is difficult to see the incentives for stimulating the economy in the long run. It is pessimistic about the prospect of the market and believes that the rental price will continue to rise in the next 2 to 3 years. Down, or return to 2003 SARS levels.